A website for music download fans offering chart albums at a fraction of their usual cost looked like it was too good a deal to be true, and now legal experts are warning that Britain's second-biggest download service probably is.

Thousands of internet users download music tracks and albums from the Russian-based website AllOfMP3.com which poses as a legitimate online store but actually sells pirated recordings. They could face legal action after the British music industry body, the BPI, said it would not rule out pursuing people who have breached copyright laws by downloading illegal tracks. The website is responsible for about 14% of all music downloads in the UK. But a leading lawyer yesterday said that users of the site should wake up to the fact that they are funding criminals.

"Many users who download music from this site are likely to assume that as the site states it complies with Russian law and licence, and fees are being paid, everything is above board," said Alice Gould, a partner at law firm Wedlake Bell. "Huge numbers of people could be inadvertently breaking the law."

AllOfMP3 claims that a loophole in Russian copyright law allows it to sell tracks at a fraction of the cost of its western rivals. Drawn by the lure of low prices, thousands of British music fans have been using the site since its launch six years ago. An entire album typically costs about £1 to buy from the site, compared with 79p for an individual track through Apple's market-leading iTunes Music Store. AllOfMP3 currently features cheap deals on chart-topping artists such as Snow Patrol and Pink, giving away their latest albums for as little as $1 (53p).

It remains unclear how many British users of AllOfMP3 realise that they are breaking the law, but Ms Gould believes that users should realise their mistake before they are faced with the consequences.

"When sites like Napster and Kazaa incurred the music industry's wrath in the past, it was well-known that their legality was dubious," added Ms Gould. "In this situation, users may well assume that downloading from this website is legal."

A page of jargon on the website attempts to obfuscate the question of whether it is legal to download from it. The American media industry has already put pressure on Russian officials to close AllOfMP3, with little success. Last week the IFPI, an international organisation representing the recording industry, made further attempts to encourage Russia to shut the site. Press reports have even suggested that American companies are taking the matter so seriously that it could scupper Russia's attempt to join the World Trade Organisation. Such a carrot and stick approach could have traction in Moscow, say insiders, especially with such a high-profile site already in legal difficulty.

But the music industry's successes against illegal downloaders remain unclear years after Napster, the pioneering filesharing service, was closed. Last week the Swedish movie download site The Pirate Bay was closed by the police, apparently under pressure from American officials. But its creators said they would bring back the site "in a day or two".

Consumers should realise that an offer that seems too good to be true usually is, said Matt Philips, a BPI spokesman. He could not rule out legal action against AllOfMP3 users.